OTTAWA — Resales of Canadian homes rose 1.9 per cent in July from June, notching their third straight monthly increase, but rising interest rates and tighter mortgage rules will remain a headwind, the Canadian Real Estate Association said on Wednesday.
The industry group said actual sales, which are not seasonally adjusted, fell 1.3 per cent, while its Home Price Index was up 2.1 per cent from July 2017.
CREA Chief Economist Gregory Klump said the improving national sales data obscure significant differences between regions, with the key Toronto market starting to show signs of stabilization.
“Regardless, rising interest rates and this year’s stress test on mortgage applicants will likely prove to be difficult hurdles to overcome for many would-be first-time and move-up homebuyers, heading into the second half of the year and beyond,” Klump said in the report.
Canada’s once-hot housing market has softened in the wake of four interest rate hikes by the Bank of Canada since July 2017 and successive moves to tighten mortgage lending.
New listings fell 1.2 per cent in July, below levels over much of the past eight years when the market was roaring, the report showed.
That took the national sales-to-new listings ratio to 55.9 percent in July, while inventory fell to 5.3 months from 5.4 months in June, CREA said.
The year-over-year gain in the group’s composite home price index was the first acceleration since April 2017, when mortgage and housing rules changes doused the market in Toronto, Canada’s largest city.
“It also suggests that the dip in home prices last summer and their subsequent rebound in and around the (Greater Toronto Area) may contribute to further year-over-year gains in the months ahead,” CREA said in the report.
Home prices were down 0.6 per cent in Toronto from a year earlier, while prices in the greater Vancouver area, the nation’s second largest market, were up 6.7 per cent.
The national average price for homes sold in July 2018 was just under $481,500 (US$367,053), up 1 per cent from the same month last year and the first year-over-year increase since January, CREA said.